MISSOULA – The Montana economy could receive a significant boost in revenue if it were to tax the sale of legalized recreational cannabis, according to a study by researchers at the Bureau of Business and Economic Research at the University of Montana.
“Our independent research utilized the extensive survey-based data that is publicly available, detailing the frequency of cannabis use of both Montana residents and visitors to give us a good understanding of potential tax revenue on legalized retail cannabis sales,” explained Patrick Barkey, director of the Bureau of Business and Economic Research, who was one of the authors of the report.
New Approach Montana commissioned the study to quantify the potential size of the recreational cannabis marketplace in Montana. The study examined the potential revenue of a 20 percent tax levied on cannabis sales as envisioned in initiatives CI-118 and I-190 that will be on the November ballot.
BBER neither endorses or opposes any legislative bill or ballot initiative, including the two initiatives that pertain to recreational cannabis legalization. This research is intended to give decision-makers better information on one aspect of the issue.
“We asked BBER to perform this study because of its reputation for impartial, transparent research,” said Pepper Petersen, spokesman for New Approach Montana. “We think it is important for Montanans to understand the full benefits of legalizing, regulating, and taxing marijuana for adults 21 and over.”
The study found that a 20 percent tax on legalized sales in compliance with the envisioned initiatives could potentially collect between $43.4 and $52 million per year for Montana in the years 2022-2026, totaling $236.4 million over the five year period.
The study also found recreational cannabis market total sales could potentially be between $217.2 and $259.8 million per year over the period of 2022-2026 and over 15 percent of leisure oriented visitors to states with legal recreational cannabis sale, visit retail stores, meaning tourism sales promise to be an important source of the tax base as well.
“We estimate that in 2022, sales of recreational cannabis to tourists will generate almost $5.9 million in tax revenue. By 2026, the projected revenue could climb to $16.8 million,” explained study co-author Robert Sonora, associate director at the Bureau of Business and Economic Research.
To view the full study, “An Assessment of the Market and Tax Revenue Potential of Recreational Cannabis in Montana,” please visit bber.umt.edu.